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 Millennials save 8 percent of their paycheck for retirement,
according to a recent survey from T. Rowe Price. Baby boomers are
just slightly ahead at 9 percent.
The only reason Millennials aren't saving even more is that they
have college debt to pay off and do not earn much money yet,
according to Anne Coveney, senior manager of retirement thought
leadership at T. Rowe Price. The median personal income of
Millennials is just $57,000.
"Their circumstances may be somewhat driving their behaviors," says
Coveney. "When they have the means to do the right thing, it appears
that they often do."
Indeed, Millennials track expenses more carefully than boomers (75
percent vs. 64 percent). And 67 percent of Millennials stick to a
budget. That's better than the 55 percent of boomers. Meanwhile, 88
percent of Millennials say they are pretty good at living within
their means.
To be fair, the boomers are saving a higher percentage of their
salary for retirement than Millennials, but twice as many
Millennials have upped their retirement savings in the last 12
months, T. Rowe Price says.
The retirement data says a lot about the mindset of Millennials.
Many baby boomers started their careers with defined-benefit pension
plans. That's not even a phrase Millennials have heard before.
Plenty of Millennials expect Social Security to go bankrupt before
they retire. They know they are on their own for retirement. And
while, on average, they are not saving as much as allowed by law,
the data suggest that as their ability to do so improves, they will
take full advantage of corporate matching plans in their jobs.
"They are exhibiting financial discipline in managing spending and
are defying stereotypes that this generation is prone to
spend-thrift, short-sighted thinking," Coveney notes.
[to top of second column] |
Millennials also don't need as much hand-holding as previous
generations. They want advice and are even getting it from what have
been called robo-advisors - something only a very small fraction of
baby boomers are willing to do. (Robo-advisors use a computer
algorithm to pick a portfolio of index funds and charge much lower
management fees than conventional brokers.)
Case in point: at automated investment service Wealthfront, 60
percent of clients are under age 35, according to the company. Only
10 percent are over age 50.
Millennials are counting their money carefully, so it would be wise
not to count them out as retirement savers.
(Corrects age to 35 in second paragraph from bottom.)
(Editing by Lauren Young and Nick Zieminski)
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